Car sales on pace to hit 60-year low

"It will be harder and harder to convince anyone who has made a recent truck or SUV purchase that reverting back to a car would make any sense."Ivan Drury, Edmunds

Just five years ago, U.S. vehicle sales were evenly split between cars and light trucks.

But this year through May, trucks outsold cars by a ratio of more than 2-to-1. And there's no sign that cars will rebound anytime soon.

"Exactly where the floor is, we're still sorting it out," said Stephanie Brinley, senior analyst with IHS Markit.

Facing this new reality, automakers have adjusted their strategies — and there's no one-size-fits-all solution. Some are killing cars while others see opportunity in selling them. Still others with car-heavy sales mixes are playing catch-up in bringing more light trucks to market.

In its annual "Car Wars" report, Bank of America Merrill Lynch forecasts that 71 percent of vehicle introductions in the 2019 through 2022 model years will be light trucks.

"There's definitely further growth ahead," Jeff Schuster, president of LMC Automotive's Americas operation, said of pickups, SUVs and crossovers. He said trucks could account for 75 to 80 percent of U.S. light-vehicle sales by 2025.

Fading loyalty to car

What people who traded in a car bought for their next vehicle

Car

SUV/crossover

Pickup

2014

68%

26%

4.10%

2015

65%

29%

5.20%

2016

62%

31%

5.40%

2017

58%

35%

5.70%

2018

53%

40%

6.30%

All data is January through May Source: Edmunds

Automakers are on pace to sell about 5.3 million cars this year, which would be the fewest since 1958. Trade-in data from Edmunds shows that the number of buyers who replaced a car with another car has fallen to 53 percent in the first five months of this year, vs. 68 percent in 2014.

"With so many consumers taking advantage of low fuel costs to test out larger SUVs and trucks — which benefit from significantly better fuel economy than their predecessors — it will be harder and harder to convince anyone who has made a recent truck or SUV purchase that reverting back to a car would make any sense," said Ivan Drury, Edmunds senior manager of industry analysis.

Automakers' wide spectrum of strategic decisions have seen varying levels of success.

Fiat Chrysler Automobiles was among the first automakers to make a notable portfolio change when it killed the Chrysler 200 and Dodge Dart sedans in 2016. Assembly lines used for both models have been turned into extra capacity for SUVs and pickups.

Nearly two years later, only 10 percent of FCA's U.S. sales are cars. Among the 15 largest automakers, that's second only to Jaguar Land Rover, whose car mix fell from 25 percent in 2013 to 10 percent so far this year.

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Subaru's shift from cars is among the industry's biggest.

Cars accounted for just 30 percent of U.S. production in 2017, down from 38 percent in 2014, according to IHS Markit.

Subaru's shift

Some automakers were better prepared than others for the shift from cars.

Subaru of America has been cashing in on the crossover craze to the point where it is on track for a 10th consecutive year of record U.S. sales in 2018.

Part of the once-niche automaker's success: Two of its most recognizable nameplates, the Outback and Forester, were pioneers in the crossover segment in the mid-1990s.

Through May, the brand's car lineup — the Impreza sedan and hatchback, Legacy, BRZ and WRX — has made up 24 percent of its U.S. sales, down from 58 percent in 2013, meaning Subaru is among the automakers with the biggest shift to light trucks.

At the same time, Subaru's total sales grew 53 percent from 2013 to 2017, even though its car volume has declined.

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Doll: Subaru still in sedan market

Crossovers have become such a huge part of its business that it sold more of them in January through May of this year than it did in all of 2013.

"We're not abandoning these segments, for sure," Subaru of America CEO Tom Doll told Automotive News in May. "We still sell some nice volume in that segment, but given the change in the market dynamics, moving from sedans into these smaller SUVs and midsize SUVs, it's a market trend."

Latecomers

Not every automaker has had the benefit of a crossover-laden lineup like Subaru's.

At Hyundai-Kia, 59 percent of its U.S. sales this year through May have been cars. While that's down from 78 percent five years ago, it's the highest percentage among the 15 largest automakers.

Hyundai-Kia's product plans call for a significant shift as it tries to play catch-up with rivals. Hyundai plans to introduce eight new or redesigned crossovers in the U.S. by 2020 to a lineup that has had redesigns and freshenings of its cars.

Luxury brands, historically known for their stylish sedans, also are filling dealer lots with more light trucks as quickly as possible.

BMW Group — the only sizable automaker besides Hyundai-Kia still selling more cars than trucks — and Daimler are adding numerous nameplates to their crossover and SUV lineups.

LMC's Schuster said luxury brands were late to the crossover craze "but are now coming in full force, with the Germans leading the way in fragmentation."